Defence companies are primed for a surge in deal activity as many look to deploy growing cash piles to invest in technologies such as artificial intelligence, sophisticated drones and space systems.
Global conflicts including the war in Ukraine have accelerated the development of new technologies, which is expected to drive dealmaking in the next few years as companies look to expand in fast-growing areas.
The leading 15 defence contractors are forecast to log free cash flow of about $50bn in 2026, according to an analysis by Vertical Research Partners for the Financial Times — almost double their combined cash flow at the end of 2021.
Although larger companies are expected to continue to spend that money on share buybacks and higher dividend payouts, deal activity is also expected to increase.